Zcash co-founder and protocol developer Sean Bowe on October 26, 2026, presented a draft Zcash Improvement Proposal to change the ecosystem’s funding mechanism. The proposal would end automatic payouts to Zcash Community Grants and redirect its 8% share of the block reward to the Network Sustainability Mechanism.

Under the proposal, funds would no longer flow directly to ZCG. Instead, they would be accounted for within the NSM without being immediately issued into circulation.

ZCG’s accumulated reserves and the governance rules for managing them would remain unchanged. The distribution of another 12% of the block reward through the Coinholder-Controlled Fund would also continue.

ZCG reserves and funding

Bowe said ZCG’s existing resources justified ending the automatic funding stream.

“ZCG has accumulated enough resources to continue issuing grants without automatically receiving a share of each block reward,” the document says.

According to figures in the proposal, ZCG’s reserves include 91,452.98 ZEC and about $8.8 million. After accounting for outstanding grant obligations, their total value is estimated at $125.3 million if ZEC trades at $1,300 and $52.1 million if it trades at $500.

The current funding arrangement provides ZCG with about 52,560 ZEC a year, Bowe said. At a ZEC price of $1,300, that allocation would be worth $68.3 million, more than 11 times the organization’s annual expenses as calculated from first-quarter 2026 figures.

Proposed activation

The changes are expected to take effect after the NU7 upgrade, though the proposal does not specify an activation block. The document remains a draft, and the proposed rules have not been approved.

Zcash developers previously set a tentative NU7 activation date of November 5, 2026. The upgrade includes reducing the block interval from 75 seconds to 25 seconds, changing fee distribution and ending support for the legacy Sprout pool.

Source: Incrypted